11 Common Tax Filing Mistakes You Want to Avoid

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Tax season can be a stressful time. Tax returns are complicated and, depending on your income and deductions, can require a significant amount of forms and calculations. Even simple mistakes can delay your return or cost you significantly more in fees and penalties. Below are 11 of the most common tax filing mistakes you want to be sure to avoid.

1. Incorrect Names

As simple as it sounds, a common mistake when filing a tax return is writing an incorrect name. You need to file your tax return under the legal name that is associated with your social security number. Putting nicknames or not including your full name on your return will get it flagged and it will most likely be sent back. If you have recently gone through a name change, you will want to make sure your social security card is updated before filing your return.

2. Calculation Errors

All it takes is forgetting to carry a one, transposing a number, or misplacing a decimal point on your calculator to cause a miscalculation on your tax return that could end up being extremely costly. Be sure to recheck your calculations even on worksheets that may seem like simple math.

3. Incorrect Account Numbers

Whether you are paying the IRS or they are paying you, ensuring that the money goes into the correct account is vital. If you are due a refund, the wrong account number will delay your return and may get your return rejected from the system. If you are making a payment a routing or account number mistake can cause you unnecessary fines and interest.

4. Extension Confusion

If you need more time to complete your return you may ask the IRS for up to a six-month extension as long as it is requested by the April filing deadline. What many filers fail to realize is that their tax payment is still due by April even if they are filing an extension. If you can file your return but can’t pay the debt immediately you will need to fill out an installment agreement request.

5. Incorrect Filing Status

Filing status is important in determining deductions as well as tax brackets. Filing under the wrong status can delay your return and cause a miscalculation of tax owed. The interactive tax assistant can help you determine your proper filing status.

6. Not Reporting Additional Income

A common mistake that can result in tax penalties and fines is failing to report additional income. You should be reporting any additional income such as income reported on 1099s, gambling winnings, contest prizes, and barter exchanges of goods and services. It is important to remember that even if you do not receive a 1099 you are still responsible for reporting the income. It is a common misconception that income less than $600 does not need to be reported, but any additional income you receive needs to be appropriately recorded on your tax return.

7. Failing to Take Required Minimum Distributions

Once you reach the age of 70 1/2, you are required to withdraw set amounts from your IRA or 401K plan. If you fail to do this, you could pay as much as a 50% penalty. You may sometimes be able to waive the penalty by filling out a Form 5349 if this is your first time failing to withdraw, but it is not guaranteed.

8. Forgetting to Report Your Charitable Donations

Throughout the year it is likely that you have donated clothes or household items to a charitable organization, or have given money to your church or other non-profit organization. You are able to deduct the fair market value of the items you have donated, so be sure to keep track of what you give through the year.

9. Missing the Filing Deadline

It is always important to file your taxes by the deadline. If you have a reason to file later, you will need to make sure to fill out a request for extension before the filing deadline to ensure that you are not penalized.

10. Not Signing and Dating Your Return

After reviewing your calculations and gathering all necessary forms and W2’s, many filers forget to sign and date the return before mailing it out. It is important to sign your name in a similar fashion with each return. While variations are expected, a significant change in the way you sign may flag the IRS as possible fraud and you may have to refile your return.

11. Forgetting to Include Social Security Numbers

You will want to check that you have the correct social security for all filers and dependents filled out properly on the return. This number is the primary form of identity for the IRS.

Want to make your tax filing as painless as possible? Avoid the common mistakes above to help prevent a simple issue from becoming a large problem.

Do you need further tax information or assistance? Contact BP Financial today and we can refer you to a CPA to make sure you avoid mistakes on your taxes.

 

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